Finally, we have increased our investment income and decreased our net operating losses. We increased our investment income by 132 percent and decreased our net operating loss by 46 percent during the third quarter of 2016 as compared with the third quarter of 2015. In the first nine months of 2016, as compared with the first nine months of 2015, we increased our investment income by 97 percent and decreased our net operating loss by 41 percent. This reduction in net operating loss permits more of the future value of our portfolio to be realized by shareholders.While making many changes over the past five years, we stayed true to our fundamental strategy, investing in transformative companies enabled by disruptive science. While we continue to believe the market has become incapable of pricing the potential of our long-term disruptive investments into existing market metrics, and while we still believe that our portfolio will return the type of returns investors have been investing in us for, it is time to change. We are five years removed from the last time we traded at a premium to NAV. It is clear that we can no longer accept that our stock price reflects only a failure by the market to price the potential of our portfolio of venture capital investments. Although we believe the former is true, the market is also pricing a pessimistic view of our business model. Over the past 18 months, in our Letters to Shareholders and in our public documents, we have repeatedly discussed the difficulties we face with our business model. In summary, there are three main difficulties: 1) structural changes in the public markets brought on both by government regulations and stock trading innovations have reduced many of the incentives for those that make a market in micro-capitalization stocks; 2) our structure as a BDC presents significant hurdles to build a firm focused investing in privately held, non-income producing securities with our existing capitalization; and, 3) the regulatory burden of many of the post 2002 regulations, such as Sarbanes-Oxley and Dodd-Frank, have been indiscriminate to size and to type of investment fund.
Management and the Board of Directors have been working on a long-term plan to 1) address these business model issues without compromising the value in our existing portfolio and 2) create future value for shareholders. While we have already taken steps to change our business, more fundamental changes will likely be required as this long-term plan develops. These modifications will be structural, as well as also likely involving additional changes.In early January 2017, we will be organizing a shareholder call to discuss the proposed changes we will seek to implement as part of the long-term plan being developed by management and our Board of Directors. We will articulate why we believe this long-term plan is the best route to both create and maximize value for our shareholders. We continue to believe there is a way to move forward to maximize the value in our portfolio and to use our structure and resources to create greater value for shareholders in the future. We also believe this long-term plan will provide a path to build our precision health and medicine company in a way structurally that makes sense for shareholders. We will be conducting our quarterly shareholder call tomorrow, Tuesday, November 15, 2016, at 10:00 AM Eastern to discuss the third quarter of 2016 and the progress of our portfolio. Shareholders can listen to the call through the following telephone numbers and/or website:
|Live Call:||(877) 303-9848, domestic(408) 337-0152, international|
Thank you for your support.
|Douglas W. JamisonChairman, Chief Executive Officer||Daniel B. WolfePresident, Chief Operating Officer|
Press Contact:Daniel B. WolfeHarris & Harris Group, Inc.212-582-0900